Indo-German Economic Relations

Enlarge image Chancellor Merkel and Prime Minister Singh at the Hanover Fair in 2006 (© dpa) With trade history that spans more than 500 years, India and Germany share a strategic partnership that has its basis in strong business and economic links. Over the years, not only has the bilateral trade increased, but German firms have discovered new investment opportunities in India and so have the Indian firms in Germany.

Indo-German economic relations have an interesting history. The first economic links between India and Germany date as far back as the 16th century. Jakob Fugger, a merchant and banker from Augsburg, financed the voyage of the first German ships to Goa, thus opening up the trade route between Germany and India. Between the 16th and the 18th centuries, a number of German companies were established with the aim of trading with Indian and other East Asian countries. In the 19th century it was the German company Siemens who built the first telegraph connection between Kolkata and London, via Berlin.

India & Germany as Trading Partners

For the year 2010, Indo-German trade relations achieved a new high, with trade volume crossing the €15 billion mark. According to figures released by the German Federal Statistics Office, between January to December 2010, the total volume of bilateral trade increased by 17.9 per cent compared to a negative percentage in 2009. First 5 months of this year has shown an outstanding growth of 28% in total volumes.

Enlarge image The Volkswagen plant in Pune, western India (© picture alliance) Germany and India have set a bilateral annual trade target of €20 billion by 2012.

The bilateral trade picked up tremendous momentum in the post-liberalisation era. The trade volume has increased nearly six times since 1991 -- with exports to Germany increasing five times and imports from Germany to India almost seven times.

The new century led to even stronger growth indicators in bilateral trade, which has grown by an average of 29 per cent per annum since 2003. A new milestone was reached in 2006, when the total volume of trade crossed the €10 billion threshold, three years earlier than expected. The bilateral trade numbers continued on an upward swing in 2007 and 2008, with volume of trade reaching €12.07 billion and €13.41 billion respectively. The recession affected the bilateral trade in 2009, but only marginally, with the figures declining to €13.10 billion.

Last Updated: Aug 2011